Beatrice Would Sell The Store To Buy Once More

To label Donald Kelly an opportunist is akin to calling Walter Payton a jogger.

And opportunity has been knocking regularly in the last few months on the chairman`s door on the 26th floor of Beatrice Companies Inc. headquarters at 2 N. La Salle St.

While practically everything at Beatrice is for sale these days--even the whole company--by 1987 Kelly may be making acquisitions again.

In his first newspaper interview since Beatrice went private in April through a $6.1 billion leveraged buyout by the New York investment firm of Kohlberg, Kravis Roberts & Co., Kelly lived up to his reputation when asked if any unit was considered sacred.

``No. Including the whole show. If some guy walked in here and wanted to dump a pretty big satchel of money, I`d call Henry Kravis (a Kohlberg Kravis partner) and say, `Henry, I think we`ve got what we have to consider.` And knowing Henry, he would have to assess it and I think we would probably come up with the same decision,`` Kelly said.

Such decisions have been coming fast and furious in the last 11 weeks. As Kelly has set out to trim the debt from the buyout, Beatrice:

-- Agreed to sell Avis Inc. to Wesray Capital Corp. for an estimated $250 million in cash in April.

-- Agreed to sell its highly profitable Coca-Cola bottling business to Coca-Cola Co. for about $1 billion last month.

-- Put its personal products group, including Playtex, Max Factor, Jhirmack and several other subsidiaries, up for sale last Tuesday.

With the Avis and Coca-Cola sales alone, Beatrice will be close to the $1.45 billion in assets that Beatrice had agreed to sell by mid-1987 in borrowing agreements made in the leveraged buyout. The Playtex package would put the firm well over that.

With that money, Kelly hopes to refinance some of the debt and be in the position in the next six to nine months to start looking for acquisitions. But he declined to be specific.

``We are engaged in a whole lot of activities, and the Street is going to be a bit surprised again. . . . As a holding company manager, I`m not particularly concerned about the kind of business we are going into. I am more concerned about what kind of a management they have, what kind of a marketplace they serve, how they do,`` he said.

For months rumors have flown that the firm`s Tropicana fruit juice unit was about to be sold and might be spruced up for the sale, but Kelly scoffed at the suggestion.

``(The) major thrust in that company is to try to move (distribution)

farther west and get the kind of market positions in the West as we have in the East,`` Kelly said. ``You don`t invest in going into markets that you haven`t been in if you`re trying to increase earnings on the short-term, because that`s a very costly kind of thing.``

While Kelly declined to say which unit might be sold next, he did say if he peddled the Hunt-Wesson food group, it would most likely be sold as a complete unit, rather than piecemeal. Included in that unit are Hunt catsup and tomato sauces, Wesson oil and Peter Pan peanut butter, to name a few.

``What has happened is that you`ve taken a whole host of dry grocery products and merged them into a single system. If you were to sell a single portion of them, you still need the same number of salespersons, the same number of vehicles, the same number of warehouses and so forth,`` he said.

To break them up, Kelly said, would lose the ``synergistic value`` of combining company functions.

``The $8 million or $10 million that you saved by putting Peter Pan into that system . . . if you sell Peter Pan out, that $8 million or $10 million isn`t going to be available to you and will probably represent a drain on the rest,`` he explained.

While that is how he views the dry grocery segment, Kelly looks at the consumer durables segment differently.

``The other units (Culligan water treatment, Stiffel lamps, Samsonite luggage) are discrete units. You can sell any one of those without any significant impact on the balance of them because there is no great overhead associated with them,`` Kelly said.

The problem with selling one of the consumer durable units is on the human, not the financial end, he added.

``The problem is how do you convince them (employees at those companies)

that we`re not on a liquidation binge or that we want to be the biggest food company in the world or some other dumb idea?`` he said.

The remark about becoming the largest food company in the world might be interpreted by some as a shot at the vision former Beatrice Chairman James Dutt had for the firm or at the tumultuous last year or so that Dutt headed the company before being forced to resign last August.